The growing problem of a lack of standing to bring a third party claim arising from insurance claims?

Typical example

“A” decides to purchase an asset. They buy it on finance and “B” (the financier) holds an interest in the asset. Transfer of ownership from B to A only happens after completion of the final payment.

What happens if the asset is damaged in the period when B owns it, but A is leasing it?

The typical situation described above sees the asset covered by insurance. It is often the case that one party is named, but sometimes the interest of the other party is noted on the policy.

So what happens next?

The insurance company checks to see if the incident was caused by a third party. If there is a right of recovery they will instruct solicitors to exercising their right of subrogation.

The issue is that the insurer can only pursue the claim based upon stepping into their policyholder’s shoes. This means that any agreement between A and B relating to finance has to remain in play. It cannot be side stepped. Therefore if a third party is pursued, they should look at whether either A or B has standing to bring the claim.

What’s the problem?

For a more detailed explanation, look at Complex Loss Structure/Theory, but in short there is a serious risk that only pure economic loss may apply. This, in light of the Spartan Steel decision, means the right of recovery maybe lost to insurers. Party A might only have an insurable interest,and B will not have suffered loss in most situations as the finance agreement normally means they receive insurance monies or full payment in the event of destruction of the asset.

Why is this a problem?

Nobody owns anything!! There is so much financing in the market, few people are owning assets they use. Even Fernando Torres was bought for Liverpool by the Royal Bank of Scotland! These issues with claims are only going to be on the rise. Keep an eye out on this.

Over and out.

Legal Orange.

The “Hatton Garden Heist” and the legal position of recovering losses

So I saw a “solicitor” on the news commenting on this who looked like a muppet and gave incorrect advice.  I felt obliged to correct them with this article.

The Hatton Garden “heist”

We all saw it on the news. A break-in by sophisticated thieves across the bank holiday weekend. Security boxes taken and a CrimeWatch segment. All round it is a fun read, but tragic to those who suffered losses.

So what is the legal position?

Well those with insurance can make a claim against their policy. It may not be straightforward as they will need to persuade the loss adjuster of the extent of their losses. If you kept something expensive in there, I hope you have some proof in support of your loss. I can only hope they declared the high value items within their policy schedule.

What about those without insurance?

There are 3 potential targets:

  1. The thieves (haha – good luck with that!!)
  2. The police (hmmmm, good luck with that, you have better prospects than the criminals – but it’s still under 51%)
  3. The security company (this is worth a punt)

Bailor/Bailee law

Without seeing the contract, only general advice can be provided here. It would also help to know the alarm records, maintenance, etc.

It seems the security company relied upon (i) internal security; (ii) additional internal security; and (iii) external security. This is a fairly good measure. Expert advice from those in the industry would be needed, but it seems the measures taken by the security company appear to be standard for high value items.

The standard of care is difficult. There is nothing in the media to suggest that anybody asked for their items to be stored in a particular manner. However, while the parties may have been free to negotiate terms to that effect in the contract (for incorporation) I expect standard-form contracts were used by all of the customers.

Absent any contractual agreement that these goods would be stored in a certain manner, the common law duty of care of a bailee is to take reasonable care of a bailor’s goods. In determining what is reasonable, case law is clear that it does not look at the value of the items in isolation. It is determined by circumstances of each particular case. These tend to include:

  1. The vulnerability of the commodity
  2. Proper and convenient measures for expeditious working
  3. Visibility of the equipment to the public
  4. The surrounding area
  5. Risk of detection and apprehension

So what would the claimant need to establish?

– the value of the item was attractive to thieves

– the normal storage of items within the industry

– the location of the premises was at risk of an elevated level of criminal activity

– the security measures were lax (e.g. activation of the alarm(s), CCTV, etc) and not a deterrent.

What is a big issue?

The response to the alarm activation is likely to be a contentious issue. If all the security company had to do was alert the keyholder(s) and the police – and this happened – then it may be hard to establish a claim. One would however think that a further enquiry would need to be made with the keyholder/police to follow up on what they identified from their attendance at site. If not, and there was an opportunity to prevent the theft, then there may have been a want of reasonable care. As the theft covered across days, this is where mileage maybe gained. It is not simply a case of a “smash and grab” where the window of time to respond is very short (e.g. 2-3 minutes) and a rapid responding police car would not have been able to prevent it.

Playing devil’s advocate this claim may be defended. It would be useful to know whether the security company  simply rented office space in the building. If so, this would prevent them from controlling some of the external and communal areas. They may also not have responsibility for the keyholder/police response.  Again, the paperwork would help to establish this.

Anyway, as always, email me if you want to formally instruct!

Over and out.

Legal Orange.

20 pieces of advice for trainees

Training contracts are not fun. Anybody who claims otherwise is either extremely lucky, or being mendacious.

4 rotations at 6 months per seat allows you a small period of time of time during which to learn enough to qualify.

My personal view is the best trainees turn out to be those who have previously spent time as a paralegal.

What trainees need to know

  1. Your trainee supervisor may hate trainees. Try not to take it personally and don’t take it home with you. The issue is likely to be with them rather than you. Whatever you do, don’t cry in the office.
  2. Be aware that other trainees in your cohort will lie to you. They are your competitors rather than your colleagues. Do not place much weight on their views. The people who really know what is going on will be the secretaries in the office.
  3. Use precedents as much as possible but make sure you spend time learning how to amend them appropriately so you don’t spend your career addicted to standard form templates.
  4. It’s ok not to want to qualify into any of your 4 seats. If you are desperate just to qualify and then go into something you like, you don’t need to commit to an area you hate.
  5. Ask questions. Don’t suffer in silence. Nobody thinks you are the finished article yet. Just don’t ask the same question twice.
  6. It’s ok to take notes (it doesn’t matter if you’re no longer in university).
  7. Get to know the solicitor accounts rules. It’s almost more important than knowing the law at some firms!
  8. If you have a chance, spend time in a compliance seat. It’s underrated. You will get to understand “good practice”. This will prevent you from allowing standards to slip and may help you avoid a professional negligence claim in the future.
  9. Conveyancing is bloody boring. Get your non-contentious seat in employment instead (if you have an opportunity).
  10. Never ask anybody over 40 in your department how they are. Their answer will only depress you.
  11. Attend Junior Lawyer Division events. You may spend your career with these career. Try not to get drunk and make a fool of yourself at any dinners.
  12. Set up a modest LinkedIn profile. You’re a trainee and haven’t achieved anything yet. Just explain what you have done so far. A down-to-earth profile is much better to read than a “trumpet blowing” profile. Don’t name drop a case you merely paginated a bundle for as one of your achievements.
  13. Moving upon qualification is ok. Not everybody will presume you were not kept on. The goal is qualification. You have decades of work in front of you, so don’t over analyse the impact of moves you make so early into your career.
  14. Don’t qualify into a dying area. Those moving into low value personal injury or asbestos claims are likely to be short careers.
  15. Criminal law is the most interesting area of law, but remember at the trainee end you will be dealing with the dregs of society, as much relates to addiction related offences (e.g. the theft/burglary charges linked to addiction).
  16. Get to your feet where possible. Even if it’s a tiny procedural application of an infant approval hearing. There is nothing worse than a lawyer who never attends court speculating on how a Judge is likely to decide. If your supervisor won’t let you speak then at least attend and watch other advocates in action.
  17. The number of hours you are in the office will not automatically equate to how good people think you are. Don’t suffer from “presenteeism” and make sure you maintain a social life. Pulling a 14-18 hour day on a regular basis normally means a person cannot manage their work correctly.
  18. Bring your old LPC textbooks in to work if you recently completed the course. You can use these to double check and reference as a comfort blanket.
  19. Attend CPD courses. Some maybe useful, but it’s a good way to get out of the office. It also helps you with networking at a junior stage of your career. See number 2 above – trainees at these events are likely to be more honest with you about how their TC is going.
  20. Brown nosing works. Everybody knows exactly what is going on, but for some reason it still ends in success. Just make sure you park your self-respect at the front door before the start of each day.

Over and out.

Legal Orange.

CFAS: NEVER NAME THE DEFENDANT!

legalorange:

A useful analysis on CFA decisions for litigation lawyers.

Originally posted on Kerry Underwood:

 

The issues raised in this blog are dealt with in Kerry’s course Fixed Recoverable Costs and Portals – book here.

Four courts have reached four different conclusions in cases where the wrong defendant has been named in a conditional fee agreement; what all four decisions have in common is that each states that there is never any need to name a defendant and doing so risks all costs being lost.

In Hailey v Assurance Mutuelle Des Motards SCCO: CCD 1405291

the Senior Court Costs Office held that if the wrong defendant was named in a Conditional Fee Agreement then there was no valid retainer and thus the indemnity principle meant that no costs could be recovered.

However the court held that disbursements could be recovered as these were payable by the claimant in any event, win or lose.

I do not pretend to understand the logic of this decision…

View original 1,311 more words

The diminishing need for instructing costs draftsmen for disputes that fall into the value band of provisional assessment claims

We have only instructed a costs draftsman twice in 2015.

Our litigation rates have been similar to previous years. This did not particularly bother us, however from time to time our in-house costs department bothers contacts us regarding potential instructions.

Having looked into a number of these files we noticed a common theme:

  • The loss of a success fee (as we tend not to charge success fees to clients, save for some of the big ticket insurer work) has removed one of the central items which prevented a settlement;
  • Most disputes now come down to time spent on activities and ‘solicitor-client’ costs;
  • Band rates are not too difficult to negotiate as a lot of work takes place outside of London;
  • All the above means the other side handle the costs in-house to also avoid the costs to their own client of appointing their own draftsman.

We have had 2 claims go to assessment. The first was local and resulted in success. The second is with the SCCO which has a mind blowing 6 month backlog so we will not find out the result for a long time.

This backlog has meant that some defendants have decided to increase their offers to pay out of their current year’s “pot” and avoiding assessment falling into their 2015-2016 figures.

I would be interested to know the trends of other litigators. Are they also finding a decrease?

Over and out.

Legal Orange.

A solicitor’s nightmare

You turn up to work. It’s just like any other day. Upon arrival that is.

For unknown reasons your case management system shows a trial date for the same morning. What?!! Oh yeah – THAT case. The case that used to dominate you with fear. The one you hoped would go away.

In fact you tried to blank it out. And today’s the day. S**t.

No witnesses. No expert booked. No Counsel instructed. Your immediate thoughts are “how can this have happened?”

You telephone the Court. You are helped for a split second when the clerk informs you the trial is not listed there for 10am. Phew!  No, it gets worse. They have transferred it to another nearby Court. The opposing side is already there. When are you turning up?

You know that you will need to hand in your notice today and fall upon your sword; but in the meantime you need to try and clear up your mess.

The most senior partner is in the office. You walk across and admit everything to him. Full and frank disclosure. The look on his face is pure anger and fear. The client is going to lose his marbles. He also knows the firm will face a claim on their indemnity insurance. It happened on his watch and the firm will take a lot of bad publicity over this.

He tells you to jump in the car – he will come with you to the court. On the way you discuss how an explanation will be provided and that an application to adjourn will need to be made.

On arrival, you go before the Court. Hands sweaty as you are an occasional advocate and know that you are about to face the brunt of everybody.

It goes as badly as you expected. Your case is struck out. No adjournment. INDEMNITY COSTS!!!

F**K F**K F***K!

Every solicitor has this dream at least once a year… mind was this week. I wonder if anybody else admits to having this dream too?

The version described above has happened to at least 2 people I know about in real life (both ex colleagues). One only had Counsel there with  no bundles, witnesses or experts. The other just walked out of the office and never returned. This is why it’s not easy to dismiss the nightmare!

Over and out.

Legal Orange.

Webb v Liverpool NHS – a party beating their Part 36 offer can still be subject to a proportionate costs order

So, a party who beats their Part 36 offer can still be subject to a proportionate costs order.

The judgment is not yet on Lawtel so the full reasoning is unknown, but it is likely to be a landmark costs case for 2015.

There were 2 limbs to the clinical negligence claim – (1) the incorrect choice of delivery;and (2) the delivery itself was negligently managed.

Although the claimant had beaten her Part 36 offer, she had not succeeded in establishing the second limb of her case and the judge awarded the claimant 65% of her costs.  The decision comes about the same time as the new Part 36 changes has come into play.

It appears the Judge decided that to allow a disproportionate costs order would result in an injustice.

Where does that leave us now? I commented on the issues towards the lower end of damages (particularly the £10k-£30k damages claims) recently. On these types of claims there is almost parity between the amount of costs it takes to reach trial and the damages claimed. Beating a Part 36 offer was a useful vehicle to achieve this. Now with this judgment being handed down, it will make solicitors wary of accepting claims under £50k. The only way to make up the difference would be through a DBA, but these still retain their nickname of “Don’t Bother Agreements” for a good reason.

Over and out.

Legal Orange.